Managers OK pension contribution

SANTA ANA After two years of wrangling, managers with the County of Orange have agreed to begin paying between 3.6 percent and 10.5 percent more of their salaries toward their pensions, on top of the almost 10 percent they pay now.

The new deal with about 1,000 managers represented by the Orange County Managers Association comes two years after their last contract expired and a year after an initial agreement was rejected by the county's Board of Supervisors.

Supervisors have been pushing for county employees to pay more of their pension costs, and the managers, who have been paying substantially less than the rank-and-file workers they oversee, have been a plum target. The deal is expected to save the county $2.6 million over the next 12 months.

The new contract also calls for probation managers – who as public safety workers have paid nothing toward their pensions – to begin doing so for the first time. The supervisors want deputy sheriffs to begin paying in separate talks that are now under way.

John Moorlach, chairman of the Board of Supervisors, said he expects the new deal to be approved when the board votes Tuesday.

The major difference between this deal and the one that supervisors rejected last year concerns performance-based pay. Under the new deal, the pay-for-performance pool will total 2.5 percent of managers' salaries.

The rejected agreement envisioned pools of as much as 4 percent. The supervisors voted it down because the pools would have increased salaries, which would in turn have boosted pensions, Supervisor Janet Nguyen said.

The new agreement calls for half of performance-based pay to be distributed as one-time bonuses, and the other half as salary increases.

The pay-for-performance component of the deal resolves a lawsuit brought by the managers over the county's refusal to pay a similar award in 2011. As such, Moorlach said, “I don't see this as a wage increase.”

After the supervisors voted down the earlier deal, the two sides reached an impasse in talks and then went to a process called fact-finding. The head fact finder proposed the current compromise. The supervisors approved offering it to the managers, who voted Dec. 3 to accept it.

From the managers' point of view, the new deal is “not as good for the members, in that future salary increases are not included,” said Karen Davis, executive director of the OCMA. However, higher pension contributions “are phased for six months, which is helpful,” Davis said.

A manager who began working at the county at age 33, for example, would pay 16.17 percent of salary toward pension costs starting next July, when the agreement fully kicks in and the managers begin paying the entire so-called employee contribution. That represents an additional 6.46 percent deduction from his or her paycheck, which the county has until now been picking up.

The county also pays the “employer contribution,” which is 28.39 percent of managers' salaries this fiscal year, according to the county's website.

Supervisor Shawn Nelson isn't satisfied with the deal. He said the managers dragged their feet in talks to keep their lower pension contributions “for as long as humanly possible.”

“This is no compromise at all,” Nelson said. “This is a windfall for the managers.” He would prefer that the supervisors impose terms that require managers to begin paying the full employee contribution in January instead of July.

Nelson said the earlier deal, which the supervisors rejected, came about because then-Human Resources Director Carl Crown, who negotiated it on behalf of the county, was “incompetent.” Crown has since retired.

With the Orange County Employees Retirement System's board having voted this month to cut the pension fund's projected annual investment return from 7.75 percent to 7.25 percent, the county's unfunded liability for pensions will balloon to about $6 billion, according to Moorlach.

Moorlach and Nelson have frequently said that wage increases are unlikely at a time when pension costs are rising. The county is in contract talks with its largest union, the Orange County Employees Association, and the Association of Orange County Deputy Sheriffs, among others.

Average salaries for OCMA managers range from about $87,000 to about $179,000 a year, depending on classification.

The managers are already paying both the employee and employer portions of an enhanced pension benefit they received in 2005 that allows them to retire at age 55 with a pension equal to 2.7 percent of their highest annual pay for each year of service. Under this so called 2.7-percent-at-55 formula, a manager who retires at 55 or later with 30 years of service gets a pension equal to 81 percent of his or her highest salary.

By agreeing to pay more of their pension costs, the non-safety managers are only doing what the folks they manage have been doing for years.

Members of the Orange County Employees Association, which represents about three-quarters of the county's roughly 17,000 employees, paid $67.6 million over a three-year period to cover employee and employer portions of the 2.7-percent-at-55 enhancement, a recent audit found. OCEA members also have been paying the employee portion of the earlier 1.67-percent-at-57.5 benefit.

The managers' agreement “is reminiscent of the old ‘follow the leader' game,” said Nick Berardino, head of the OCEA. “The managers have been eight years behind us and now get an extra six months to catch up; we have been paying the entire amount since 2004.”

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